Saving to allow for early retirement- are we maximising our options?

rundmc-k

crv1963 said:

rundmc-k said:

My wife and I are both 40yr old NHS workers & would both like the option of retirement at 55 or earlier. I do all our finances and I just want to make sure I am doing things "correctly" or at least sensibly, and would be interested to know if there is any advice on if we could do things better.

I am a higher rate tax payer and my wife is lower rate. I'll collate our incomes/benefits for the following:
I don't have a detailed spreadsheet type "number" needed for retirement, but I know that currently we could live comfortably with combined gross £50k. We have no mortgage or dependents, but both of those things could change in the nearish future.

We take our main NHS pension at SPA, which is currently 68. We would be in receipt of well over £50k p.a. from DB pension and SP, even if we were to retire at 50, so I feel that 68 onwards is covered.

We can also draw an NHS DB pension at 60, which would be somewhere in the region of £22k p.a. plus ~£66k tax free lump sum, which works out around £30k p.a. from age 60-68 (almost all tax free).
In addition to that I have paid into LISAs for a few years for both of us and intend to maximise payments into that for the next 10yrs. As long as the LISAs are invested in a non-volatile way nearing age 60, there should be £100k+ in both accounts when accessible, so it feels like 60-68 is covered.

I opened a SIPP a few years ago, and have been trying to invest in that where possible also. Now, the earliest I can access that is 57 (more likely 58 or later I guess), but if 57 is possible, then that could already cover age 57-60 for us.

I am investing in S+S ISAs for both of us, I've had mine 4 yrs & and my wife 2 yrs. I feel if we had £150k+ in each ISA it could potentially cover the years 50-57 if we wanted to be stopping work by then. That seems doable, although the S+S element adds volatility which I am ok with at the moment, but would be less so when approaching 50.

So if you have read all this, many thanks. I just wonder... have I made any mistakes/unwise moves or does that plan seem feasible? Are there any "better" investing suggestions I could be doing for us (I'm not asking for crystal ball stuff, I know that would be lovely).
I know life circumstances could change as I said earlier, mortgage if we move (we're looking), children (we're thinking), illness (hope not), but this is our current situation.

You have a pretty solid foundation. ERRBO is something to consider for one or both of you. I would also suggest utilise your SIPP savings, especially the HR salary. Also though consider a balance in terms of pension savings, my NHS DB plus SP (when I reach SPA) will far outweigh my wife's DC pension plus SP so although tax wise it makes sense for us to save into my SIPP for us saving into her SIPP is our priority.

Also consider what you are aiming to retire to. Work fills 40+ hours per week, especially with travel time on top, it also provides social interaction and making the grey matter work. Have a plan of what your aims are and what these will cost (in today's money), there's lots of things to consider and finances are only a part of it.

I will look into ERRBO a little more. Do you feel it is financially worth considering even with the way we are currently trying to utilise SIPP/LISA/ISAs?

Re balancing pension savings, I was considering starting a SIPP for my wife, as at age 60 if she draws the first part of her DB pensions, she would most likely still have 5-10k personal allowance available, so having enough in a SIPP to cover that seems sensible, even if mathematically it's still slightly preferable to keep saving into my SIPP until it's likely to make me HR.